Globalization

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Artist's rendition of globalization in an economic context.
Artist's rendition of globalization in an economic context.

Globalization (or globalisation in British English) refers to the ever-increasing flow of goods, services, information, people, and communication around the world. All countries are moving towards a singular, integrated, interconnected economic system.

Areas which were once isolated and separated from the rest of the world are now accessible, connected, and more assimilated with not only their neighbors but the rest of the globe. Globalization has been a trend for the past two decades.

Contents

Drivers of globalization

Types of globalization

Americanization (or Americanisation)

Critics of globalization had, in the last few decades, called it Americanization (or Americanisation in British English). They suggested that globalization was actually a cover for America conquering the world economically, or acting as an economic colonialist.

This critism has abated in recent years. The American economy is growing at a much slower rate than the economies of China, India, Brazil and Russia, the emergence of these BRIC entities has changed the balance of power. Furthermore, the credit crisis and deficit have led America to become a debtor nation, with creditors in Asia and Petroluem-exporting countries from OPEC and elsewhere increasingly owning American assets. [1]

Globalization of markets

This refers to the merging of national markets into one. These are markets that were once independent and separate. With globalization of markets, it is often no longer useful to talk about the "UK market" or the "Japanese market", as the differentiation between them is nebulous.

Globalization of markets leads to falling trade barriers, which facilitate international trade. Moreover, the preferences and tastes of many buyers and consumers are becoming homogenized to one global standard. This leads to companies being able to offer the same products to buyers worldwide. However, this is also a cause of companies doing such.

Globalization of production

This refers to the increasing trend of companies being able to find goods and services from around the world in order to benefit from differences in the quality, cost, and performance of things such as labor, capital, raw materials, and land. Globalization of production makes companies more competitive by improving their quality or volume, and lowering their costs.

The globalization debate

Benefits of globalization

Globalization facilitates the formation of a common market globally. Proponents of globalization say that it spreads wealth and work, results in higher economic growth and higher consumer income, and makes products and services more competitive to buyers.

While there is much debate about the topic, the fact remains that international trade is essential to most countries' existences. Even the US, the biggest economy, would suffer. Some items that the US would forfeit if they could not trade with other nations are:

  • 56% of its oil
  • 60% of its spices
  • Most clothing
  • Bananas
  • Tin
  • Diamonds
  • Coffee
  • Tea
  • Silk
  • Cocoa
  • Significant percentages of American-made automobiles
  • Significant percentages of American-made electronics
  • 27% of consumer goods overall (in 2006)
  • 36% of industrial supplies overall (in 2006)

Drawbacks of globalization

Critics of globalization suggest that it will result in damage to the environment, pollution, cultural homogenization, job losses, and an imperialistic imposition of western ideas and values on developing countries.

Ultimately, if globalization continued, there would be no political, cultural, social, or technological divisions, separations, or barriers between nations. The planet would resemble one uniform, equal, homogeneous country.

Also, perhaps people could be better off financially but poorer in other ways. These could be compromises to their happiness or identities through the destruction of the environment, culture, or tradition. These are values economics cannot measure.

Globalization in China

Globalization has brought numerous development opportunities to Chinese economy. Ever since China opened up to the world through its economic reforms in 1978, it has been experiencing effects of globalization. Increased FDI and the establishment of special economic zones introduced foreign funds and business to China.

One landmark event was in February 2009 when more cars were purchased in China that month than in the US. This shift of commerce and consumption can largely be attributed to the dire credit crisis in the US then and the fact that Chinese have more savings per capita than Americans. [2]

Globalization in India

India is often regarded as the prime example of globalization due to its involvement in outsourcing. Industries often outsourced to India include business process outsourcing and IT jobs. [3]

History

True globalization began with the Romans almost 2,000 years ago. The Roman empire established trade links reaching as far north as Britain and as far east as India, Pakistan, and Iraq.

The trade of spices, in particular pepper, which at one point was worth more than its weight in gold, spread currency and products across continents.

See also

References

  1. ↑ http://www.economywatch.com/economics-theory/globalization/discontents.html
  2. ↑ http://www.carfreaks.info/autonomics
  3. ↑ http://www.economywatch.com/economy-articles/globalization-in-india.html
  • The Complete Idiot's Guide to Global Economics, Craig Hovey with Gregory Rehmke, 2008, Alpha Books, ISBN 978-1-59257-660-9.
  • The Economist

Further reading

Common Misspellings

  • Globlization, Globlisation
  • Globalzation, Globalsation
  • Globalizashion, Globalisashion
  • Globalkzation, Globalksation
  • Golbalization, Golbalisation
  • Globalizaton, Globalisaton
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